Multiple regression analysis will be used to test the hypothesis that the recent dramatic increases in the U.S. cesarean rate is due in art to economic factors. Two economic influences stand out: the threat of a malpractice suit; and the self-interest of doctors and hospitals. The proposed research controls for the former and focuses on the latter. One research hypothesis is that in areas with high ratios of obstetricians to births, and/or high vacancy rates in obstetric wards, higher cesarean rates will compensate providers for what would other wise be lower incomes. A related hypothesis to be tested is that c-section rates are higher where the numbers of births have fallen in recent years. The hypothesis which is central to the proposed project is that HMO (health maintenance organization) obstetric deliveries will have a lower cesarean rate than fee-for-service practice (controlling for other factors), as HMOs have to absorb the additional costs associated with c-sections, while other providers stand to gain from them. The applicant has assembled a data set consisting of 30,000 live births occurring in New York state in 1982, 1983, 1984, and 1985 in areas which there were HMOs operating and providing obstetric services. Approximately one-third of the births are in HMOs. The data include, for each birth, demographic and background data for the mother; her residence and place of delivery; parity, gravida, method of delivery; prenatal care; birthweight and birth outcomes; hospital; and HMO/non-HMO. Regional data, including market conditions (such as obstetric capacity in relation to demand), and obstetric malpractice suits will also be used. In the statistical analysis two different dependent variables will be used. In one set of analyses, the dependent variable will be method of delivery, cesarean or vaginal. However, as these equations are likely to be dominated by independent variables reflecting diagnosis (breech presentation, dystocia, etc.), in another set of analyses diagnosis itself will be used as the dependent variable. The research will add significantly to the literature on provider-induced demand for medical care; health maintenance organizations; and the determinants of cesareans. It has cost-control, medical, and ethical implications.